Jeronimo Martins: FY 2015 (first take): JM is very impressive but also very expensive…

NEUTRAL, Fair Value EUR13,5 (+1%)

News published on
March Thursday 3, 2016

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FY
2015 (first take): JM is very impressive but also very expensive…

We deeply admire JM’s exemplary model that
should benefit in the future from moves within the industry favouring both
discount and proximity. The retailer again showed its class by publishing its
strongest LFL rates for two years at Biedronka (+3.8% in Q4) along with a
strong margin (7.05%e i.e. +80bp), while Portugal continued to show an
impressive topline-driven performance (+4.1% LFL excl. fuel at Pingo Doce and
+1.4% at Recheio) and a margin in line with expectations (5.7%e, down 30 bp in
a very promotional environment). Only valuation (2016 P/E of 23x vs 16x on
average for the panel) remains a hindrance. Neutral.